A survey of 103 members done in conjunction with HAMA’s 2020 annual fall meeting showed that 2.9% had properties in their portfolio meeting budget right now and 59.2% expected 2020 full-year to see RevPAR declines of 50% to 75% compared to budgets. Another 18.5% expected declines in excess of 75%.

“This pretty much validates that our members are falling the same range (as national trends of declining revenue), or maybe a little bit more impacted given the nature of full-service hotels,” said Larry Trabulsi, EVP of CHMWarnick.

Third-party versus brands
Survey results also showed that asset managers currently have a higher degree of confidence in third-party managers over brand management. When asked if brands have been “effective partners” at brand-managed properties, 22.3% said yes and 52.4% said somewhat. In comparison, 52.4% said third-party managers are effective partners, and an additional 30.1% said they’ve been somewhat effective.

HAMA board members said this is reflective of a greater degree of flexibility for third-party managers in the current environment.

“Just being smaller, they were able to react faster,” said Kim Gauthier, SVP of HotelAVE.

In retrospect, brand-managed properties should have probably laid off employees more quickly than they did, she said.

“But the thing is, when we were sitting here in March or May, nobody would have conceived that we would have this type of impact on RevPAR this late in the year,” she said.

Chad Sorensen, managing director and COO of CHMWarnick, said the costs of letting go employees continues to be a major obstacle for ownership groups, and that’s particularly true at brand-managed properties.

“The severance cost and the furlough carrying costs were much greater with the brands, so I think the third parties were able to react more quickly and the impact to ownership was seen immediately,” he said.

Trabulsi also said communication was easier with third-party managers.

“The third-party companies were able to have some dialogue and get responses back a little bit more quickly than we could on the brand managed side, who were, quite frankly, putting out fires all across the country in numerous places,” he said. “The question was if your fire was hot enough for them or not.”

Lender flexibility
A majority of respondents said they’re seeing at least some flexibility from non-CMBS lenders for properties within their portfolios.

When asked if lenders are flexible partners, 32% said yes, while 39.8% said yes, compared to just 4.9% saying no.

But there is a palpable sense lenders’ patience may be waning, with 41.7% expecting that flexibility to end by the fourth quarter of this year. Among respondents, 23.6% expect it to end in first quarter 2021 and another 25% expecting the second quarter.

Trabulsi said this reflects what he’s seeing, as most of his company’s clients “have a plan in place through the end of this year.”

“As we turn the corner here for the 2021 budget, the topic really is, when do we think things are going to get better and where is that going to take us,” he said. “For a lot of our clients, they have a certain amount of funds set aside right now, and it’s now about how long is that money going to last.”

He said the discussions with lenders are predicated on those plans and those set aside funds but if “things don’t turn around dramatically, then what?”

Gauthier said this uneasiness and lack of clarity is in stark contrast with the last two downturns.

“There’s just no clarity in terms of when things will come back,” she said. “And I think this is going to mean a lot more conversations, or maybe the same conversation over and over again, … because everybody can only put a plan for three to six months out at this point.”

Sorensen said right now lenders want to see a plan from their borrowers that can deliver some degree of comfort.

“They’re looking for some type of confidence in ownerships plan,” he said. “And that continues to get to be more and more of a difficult discussion.”

He also noted, though, that “lenders aren’t in the business of owning hotels.”

“I think that’s what’s driving a lot of lenders. They don’t want the keys back,” he said. “And I think we’re hearing more and more that they’re not going to accept the keys. So they don’t have much option but to work with borrowers to try to continue to push this forward until we get that line of sight.”